Royal Mail To Be Sold 'Too Cheaply' In Government 'Fire Sale' Says Labour

Labour today raised fears that the Royal Mail will be sold too cheaply ahead of an announcement on the regulation of the industry.

Ofcom will detail measures it says will safeguard the universal postal service.

The move is likely to herald an increase in stamp prices, currently 46p for first class and 36p for second class.

Ian Murray, Labour's shadow postal affairs minister, said: "Royal Mail is one of the last publicly owned British institutions and whilst we always recognised that it needs investment and modernisation, we disagree on wholesale privatisation.

"There is now a real danger that the government will sell this proud institution cheaply, and that customers could see a hike in prices and a reduction in levels of service. This can't be allowed to happen with Royal Mail, or a fire sale of the profitable parts of Royal Mail whilst other areas wither on the vine."

A Royal Mail spokesman said: "Royal Mail is awaiting the outcome of Ofcom's consultation on its proposals for future regulation of UK postal services before announcing stamp prices for 2012.

"We will, of course, inform customers of changes to stamp prices as soon as we are able to.

"We know how hard it is to ask for a price rise when the economy is as tough as it is now. Last published figures show our core mail business made a £2 million loss every week. Royal Mail has made a loss on its core mails, including packets, activities of almost £1 billion over the last four financial years. That is not a sustainable position for any business.

"Royal Mail has serious financial challenges. Mail volumes have fallen by 25% since 2006 and the regulatory regime has meant that prices have been artificially low.

"Our difficult financial position means that there has been significant under investment in Royal Mail for a number of years, including in crucial areas like IT where we really lag behind our main competitors.

"We have some of the lowest stamp prices in Europe and amongst the highest service standards. They are very expensive to maintain. To maintain this vital service, price rises are really needed, given Royal Mail's financial position."